One Stop Order Management Services for E-Commerce

elatedmusteringDéveloppement de logiciels

21 févr. 2014 (il y a 3 années et 8 mois)

290 vue(s)

133
-
C99

Rev. 2/15/00


Professor Jay Rao of Babson College and Carolyn Hodge MBA ’00 prepared this case as a basis for class discussion
rather than to illustrate either effective

or ineffective handling of an administrative situation. Some names and figures
have been altered for purposes of confidentiality.

Copyright © by Jay Rao 1999 and licensed for publication at Babson College to the Babson College Case Development
Center. T
o order copies or request permission to reproduce materials, call (781) 239
-
6181 or write Case Development
Center, Olin Hall, Babson College, Wellesley, MA 02157. No part of this publication may be reproduced, stored in a
retrieval system, used in a sprea
dsheet, or transmitted in any form or by any means


electronic, mechanical,
photocopying, recording, or otherwise


without the permission of copyright holders.



OrderTrust Inc.


One
-
Stop Order Management Services for E
-
Commerce


The situation in the hallway was tense as OrderTrust (OT) salesperson; Mike Murphy
berated a representative of Cyber Fulfillment, a
fulfillment company
1
. Despite the fact that
expectatio
ns regarding the content of the presentation to the joint customer were clearly
communicated prior to the meeting at OT, the Cyber Fulfillment account executive had clearly
crossed the line. As another partner of OT
--

the web developer, and OT customer su
pport
partners sat stunned, the account executive proceeded to present Cyber Fulfillment capabilities in
building e
-
commerce sites, back
-
end integration and customer service.

Kay Paciorek, Director of Partner Programs was demanding answers. Despite the le
ngthy
2
-
hour briefing with Cyber Fulfillment they had turned into a “customer rustler.” This was the
latest of several instances where the so
-
called partners had pitched or bid against OT services
directly.

She prepared for a meeting with the salesforce t
o discuss the recent trend of “rustling”
incidents and more importantly improve joint engagements with partners, a necessary channel
for OT sales. What was the best way to manage the relationship with partner sales? How could
OT’s partner programs create i
ncentives that would motivate partners to sell more transactions.
Opinions varied in the Sales and Marketing departments, some thought a “
spifs
” program, where
partner salespeople received a percentage of the revenue generated, some thought a formalized
re
seller program would help move the company into an exponential growth period, still others
suggested vacation getaway incentives.

Background

OT (formerly LitleNet, pronounced Lye
-
tel
-
net) was founded in 1995 by Tim Litle who
had over 30 years of experience

in supporting direct marketers. Prior to OT, Litle built two of the
leading payment processing companies devoted to the direct marketing industry, Litle and Co.



1

All terms in italics are described in the glossary

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

2

and Direct Marketing Guaranty Trust (DMGT). In the 1970s, Litle saw how banks were taking
adva
ntage of catalog merchants. The merchants gave their order slips to the banks and the banks
processed the rest. The merchants were charged 2% of revenues
--

a big chunk of an already tight
margin. Further, some banks were actually lying about bad orders an
d stealing from the
merchants by inflating their cuts. Litle used computers to make the payment processing more
transparent to the merchant and this cut the banks’ charges in half. He was credited for turning
the catalog business into a thriving industry.
2

Among direct marketers Tim Litle “walked on
water.” OT’s e
-
commerce focused technologies evolved from the core competencies of non
-
face
-
to
-
face transactions of catalog marketing and the industry relationships that Litle had created.

OT, based in Lowell,
MA, employed a workforce of 130, providing total
order

life cycle

management services. OT’s network
-
based order processing connected
merchants’

call centers,
telemarketing centers, web stores,
suppliers
,
fulfillers
,
payment processors
, and customer service

centers. In mid 1999, OT counted more than 500
endpoints

on its network, and was adding 20
more each week.

OT filled a market need for merchants who were looking for a one
-
stop shopping solution
for order fulfillment. For most merchants, building a custo
m order fulfillment network was
expensive and time consuming. Hence, OT developed a robust, vendor neutral and scalable web
-
based solution to address merchants’ issues.

OT’s product plugged into major e
-
commerce servers like Open Market’s Transact and
Mic
rosoft Site Server. OT had also integrated into most of the major
Legacy systems

commonly
in use in the marketplace. OT’s services included complex order routing to multiple suppliers,
payment processing, customer usage tracking and customer service (see E
xhibit 1).

Customers

OT’s customers included online

merchants, ISPs, merchant aggregators, retailers

and
direct marketers
. OT’s customers included Lycos, AOL, Catalog City, SkyMall and 1
-
800
-
FLOWERS (see Exhibit 2). Target customers were merchants with e
-
c
ommerce channels
processing more than 5,000 orders per month. Since the core value of using the OT network was
in connecting merchants to their multiple end
-
points, the merchant should have had complex
sourcing arrangement or category expansion plans. Typi
cal OT customers were unwilling to
invest in and build their own infrastructure at a time when the rules of e
-
commerce were
changing rapidly. In late 1998 Lycos was the first internet portal to actually sell products directly
to consumers by providing an e
asy
-
to
-
use, one
-
stop
-
shopping experience online. Catalog City
was an online collection of more than 1000 catalogs. The site included brand name catalogs such
as Brookstone, Hammacher Schlemmer, Laye Bryant, etc.

In order to be a customer of OT it takes a
major mindset. We are asking them to
outsource a huge part and a very critical aspect of their business. They own all the
data. We don’t own any of the data. We don’t share any of the information.
Security is a huge issue for us. They [customers] write the

rules of how an order
goes through. They get reports of what happens to an order as they specify
--




2

The People behind

the People behind E
-
commerce,
Fast Company
, no. 25, 1990, p184

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

3

which fulfillment house, how long, how many reports per week, exception
handling, etc.


--

Scott Walters, Business Development Manager, OT

OT Services

The

customers’ view of e
-
commerce ends once they hit the buy button on the webpage or
place an order via a 1
-
800 number. The purchase triggers the order lifecycle process (the “back
-
end”) with multiple transactions involving a number of parties. Typical trans
actions include
credit card authorization and settlement, order routing to different suppliers, status updates from
suppliers, and updating consumers on orders (See Exhibit 3).

“We are simply the best one
-
stop solution for companies who want superior orde
r
processing, and don’t want to build their own back
-
end network. Merchants need
to be able to focus on aggressively marketing their brands and give someone else
the technological responsibilities. OT takes on that burden and eliminates the
operational ris
ks by providing fraud detection, complex order routing, secure
payment processing, loyalty and affiliation development and complete system
redundancy. Most merchants just don’t have the bandwidth and capabilities to do
it themselves”
3


--

Jim Daniell, CEO,

OT

Order Processing Services

OT merchants captured customer orders in different formats and normalized them


Microsoft Site Server
HTML

order forms, phone orders, custom
Legacy systems
, plain paper
order forms etc. These orders were transmitted to OT and

onto supply endpoints in various
formats including


FTP
,
EDI
, Email, Fax or Fedex. By the end of 1998 only a third of all
transactions came directly from the click of a button on a webpage. This was largely the result of
fulfillment and drop
-
shippers lega
cy inventory and warehouse control systems. By 1999 the
growing need for realtime order status and inventory control was urging merchants to choose
suppliers based on the modernity of their IT systems, and ability to connect with the OT system
in realtime.

Our position has been that of an order
-
processing network with a great deal of
flexibility. We realized that there are a lot of legacy systems out there that we
need to integrate into. We never want to dictate to somebody what format to use,
what communic
ations protocol to use, what systems to use and so forth. For
instance, we will have a hard time going to someone like Sears and telling them,
sorry Sears the systems you have in place for 30 years will not integrate with ours.
Also the culture of the dire
ct marketing industry is, frankly, if something works
today, why change it.


--

Scott Walters, Business Development Manager, OT




3

OrderTrust press release, March 23, 1998

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

4

The OT network consisted of


Sun Solaris UNIX servers, EMC and HP storage systems,
Informix Database, and supported a wide rang
e of connectivity options using all the latest
security methods, including multiple types of encryption, firewall security, network address
translation and communications proxies. The network ran on infrastructure with over $10 million
investment.

OT was
an open network. OT supported all communications standards including
TCP/IP
,
FTP
,
EDI
,
SSL
, and many more. In addition, OT supported Application Programming Interfaces
(APIs) for various platforms and programming languages. This obviated the merchants from

becoming hardwired to a particular business model or technology. The high
-
speed network
processed millions of business transactions every day, 24
-
hours a day. OT employed security and
reliability measures including 24x365 monitoring, fail
-
safe operation,
and built
-
in redundancy.

OT captured and routed both simple (one order to one supplier) and complex (different
line items to different suppliers) orders to the appropriate locations. One of the biggest technical
challenges involved the breaking up of a sin
gle order into multiple line items and routing the line
items to multiple suppliers. Each of these suppliers could be using a different protocol


EDI,
FTP, etc.

OT had made it very easy for merchants to capture an order and plug it into its network.
Ther
e were
plug
-
ins

that sat on the merchant’s software and once the customer hit the order
button it immediately opened up a
TCP/IP

socket and pushed it over to OT in real time. For
those companies that were not using an out
-
of
-
the box type of platforms or se
rvers (e.g., non
-
Microsoft), then OT helped the merchant, via an OT integration partner, who would work with
the merchant to create their website. OT had developed a software toolkit (Developer's ToolSet
or LinkSet) to facilitate easy integration into OT’s

site.

Payment Processing

OT provided routing of credit cards for authorizations, settlements, and refunds between
the payment processor and the merchant in batch or real time.

Once the order was captured, OT used a payment processor to get an authorizat
ion.
Traditional retail companies or marketers were doing batch processing on credit cards while web
merchants or typical start up companies or web
-
only merchants who were starting from scratch
were getting real time authorizations because they did not hav
e any of the legacy systems to
worry about.
FTC

regulations stipulated that a customer credit card couldn’t be charged until the
product was on the loading dock or it was actually shipped. If you had two or more end points
the processing might have had the

complexity of single order with multiple line items. For
example, if one product was in stock and another product was not in stock, then the law allowed
the fulfillment of the available product but required a re
-
authorization for the other when the
item s
howed up in stock. OT automated this entire process. This was especially ideal for medium
to large size companies. Because OT maintained all the appropriate information, settlements
could be automatically initiated when orders were fulfilled. Hence, mercha
nts got paid sooner,
more regularly, and more reliably. OT routed real
-
time authorizations, response information,
payment deposit, and refunds to and from the payment processor.

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

5

Inventory / Product Availability Services

OT managed status information at a l
ine item level and simplified the complexities of
dependency on multiple inventory management. OT enabled merchants to provide excellent
customer service by keeping all parties informed
--

apprising the consumer of the status of
his/her order at all times,

including shipment tracking numbers, back
-
orders and returns. OT
could notify a purchaser of changes to an order's status and its final disposition, enabling a
marketer to deliver additional follow
-
up sales messages.

Loyalty and Affiliation Services

OT pr
ovided a loyalty framework that enabled merchants to design reward programs
based upon their business needs. The OT network tracked buying activity, known as “RFM”
recency, frequency, and the monetary value purchases. This was a growing source of revenue f
or
the company as e
-
commerce sites tried to increase their
stickiness

and services for customers.

OT Product MarketPlace

In 1999 OT introduced a merchandizing database service, that would provide a savior
product for online merchants wishing to expand into

new categories without adding complexity
to their network. OT had contracted out with some major suppliers, manufacturers, and
distributors, populating a product database with nearly 500,000 SKUs.

OT stored and updated product SKUs, descriptions, and the

pricing in the Product
MarketPlace database and allowed prospective merchants to populate their store with listed
products. Customers had immediate access to a wider range of merchandise. OT acted as a
normalizing service, a broker in the middle deliverin
g flexibility to the merchants on the front
-
end. Freed from the capital restraints of a long
-
term contractual relationship with suppliers,
merchants were able to test market new categories of products, and refresh their merchandising
mix effortlessly.

Pri
cing

In 1999, Forrester Research estimated the average cost to develop a premier e
-
commerce
site between 1 and 5 million and a top
-
of
-
the
-
line site costing up to $20 million (see Exhibit 4).
Within this framework, the cost benefit to integrate into the OT
network was obvious. The
minimum front
-
end development for most of their customers stood at $250,000 for everything to
the shopping cart. One of OT’s more attractive propositions was the transaction based pricing
model it used, while many service providers

were charging a percent of order sales value, cutting
into preciously thin margins.

OT’s pricing model was a three
-
tier structure consisting of a setup fee, a monthly
maintenance fee and volume
-
based monthly transaction minimum. The setup fee depended on
the difficulty of integration into the merchant’s commerce server and the number and the degree
of difficulty of connecting its end
-
points. Integration to one of OT’s existing 500+ endpoints
resulted in a lower set
-
up fee. Depending on the complexity of th
e integration the fee varied from
$10,000 to 50,000. As the company grew, the average setup fee had gradually grown to $50K.

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

6

The second component of the pricing structure was a transaction fee based on a monthly
minimum business of at least 5000 orders at

$1 per order. As order volume rose the price per
transaction dropped quickly to as low as $0.2.

The final fee charged the merchant a minimal monthly maintenance charge per endpoint
to maintain the connection and ongoing monitoring.

Competition

The 1998 C
hristmas season was an eye
-
opener for web retailers (see, Exhibit 5).
Revenues during the 1998
-
holiday season alone more than tripled over 1997 and 1998 total
revenue for online merchants surpassed $13 billion.
4

Most small merchants, used to hand
-
filling
o
nline orders realized that the back
-
end was a whole lot messier than they expected. E
-
commerce
became a race to deliver on the purchases that marketing had converted lookers to buyers.

Prior to the 1998 Christmas sales explosion, low order volumes allowed

web merchants
to take orders by hand, down load and re
-
key them into existing legacy systems. The 20
-
year old
EDI was the most mature commerce technology in existence. Business
-
to
-
business commerce
used EDI to share documents, orders and invoices in forma
tted standards and exchanged them
over value
-
added networks (VAN). EDI was a costly solution requiring every business partner
on the supply chain to commit resources to meeting the established EDI standards.
Manufacturers were at the mercy of retailers and

smaller retailers were at the mercy of
distributors and larger suppliers.

Momentum was building towards providing back
-
end outsourced services for on
-
line
merchants to address the daunting technology and back
-
end order processing challenges they
faced.

T
hough many firms claimed to provide end
-
to
-
end solutions, none were able to provide
all pieces of the complex e
-
commerce services effectively. With more than a dozen pre
-
packaged
commerce solutions, in the $5K
-

$400K range most lacked the flexibility and
that drove firms
with large order volumes to develop in
-
house end
-
to
-
end customized solutions, e.g., Dell, Cisco.
These systems were built either by in
-
house programmers, outside system integrators, or by
large
-
scale web developers. OT viewed homegrown sol
utions, and systems integrators as their
primary competition.

In addition to custom
-
built in
-
house packages, OT operated in a hotly competitive market
that included firms like Open Market, CyberSource, CyberCash, Cybergistics, iCOMS,
Keystone, Saleslink,
Hanover, Fingerhut, Pandesic, Sunset Direct and other off
-
the
-
shelf plug
-
n
-
play software solutions. Even IBM, EDS and Netscape had moved into providing e
-
commerce
solutions. The array of options available to e
-
merchants was dizzying and most “solutions”
se
emed similar in their perceived value and product descriptions but were all different in their
execution, implementation, cost and maintenance. Each service or product had evolved from a
different area of internet experience. Fulfillment houses such as Sun
set Direct, Keystone and
Cybergistics were performing order processing services. CyberSource grew out of the EDS



4

Maximizing Your E
-
Commerce Investment: The “Must
-
Haves” for Successful Online Selling
-

OrderTrust,
Hurwitz Group, Inc. Feb. 1999

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

7

(Electronic Software Distribution) market and specialized in fraud screening. iCOMS used
VARs

such as Wells Fargo, Bank of Boston, USA’s Paymen
t Tech and system integrators to sell
services to their clients as part of their e
-
commerce projects. Pandesic, a joint venture funded by
SAP and Intel, did not provide any commerce hosting services but had developed a SAP R3
-
based system that it sold dire
ctly to customers, taking a percentage of transaction revenue.

In the fast
-
moving e
-
commerce services arena, companies scrambled to provide total
solutions for online merchants expecting to launch e
-
commerce sites in super
-
heated time
horizons. The expand
ing reach and requirements for technology included everything from
customer service applications, knowledge bases, order and payment processing and accounting
systems. The integration of all these applications into multiple legacy systems operating along
t
he company supply chain created an extremely complicated environment which forced
technology providers to partner or perish in order to provide best
-
in
-
breed solutions for
customers.

Table 1

Competitors by Product Offering

Services

Offered by OT

Back
-
end
Integration

Product
MarketPlace

Payment
Processing

Order Processing

Type of competitor

Systems
Integrators, Web
Developers

Merchandising
Systems,
Affiliate
Networks

Other networks,
software, Payment
partners

Other Networks, fulfillers

Examples

Scient,
Viant,
USWeb,
Agency.com

BlueMartini,
BeFree

CyberSource,
ICOMS
CyberCash,
Paymentech, ATS
bank

CyberSource, ICOMS,
Keystone, Saleslink,
Hanover, Cybergistics,
Sunset Direct

Cross
-
product
competitors

Pandesic, Cambridge Technology Partners, Netscape, EDS,

IBM


OT Partners Commerce Advantage Program

In 1998, OT started the Commerce Advantage Program offer of end
-
to
-
end electronic
commerce solutions to its customers by drawing on the strengths of its partners. Like most
companies in the internet space OT en
gaged customers with a number partners since no one firm
offered a complete outsource solution for an e
-
commerce site. OT’s partners included systems
integrators, e
-
commerce platform developers, interactive agencies, hosting &
ASP

management
companies, e
-
c
ommerce consultants, customer service companies (email, online, call centers)
and fulfillment houses.

All Commerce Advantage Program Partners benefited from a dedicated partner manager,
access to OT’s Developer’s ToolSet and LinkSet product, access to sal
es material, training and
joint
-
marketing programs. They received pre
-
qualified sales leads and access to other Commerce
Advantage Partners. Partners could participate in one of three programs: The Referral,
Integration, or Technology Partner Program.

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

8

Ref
erral Partner Program

Referral Partners were a select group of ISPs, Web
-
hosting companies, and Internet
consultants who promote and market OT's services. The goal of this program was to draw on the
respective strengths of both organizations and create win
-
win partnerships. Referral Partners
marketed OT's services receiving support for their direct sales activities and strengthening their
own channel partner programs with interactive agencies, web designers, and system integrators.
They included CableSoft I
nc., Creative Strategic Solutions, and Digex.

Integration Partner Program

Integration Partners included interactive advertising agencies, system integrators, and
Web developers who connected the merchant commerce site into the OT network as well as
promoti
ng and marketing OT's services. Integration Partners benefited from technical
documentation, technical support, and software maintenance releases. They included Stellcom,
OneSoft, and Breakaway Solutions.

Technology Partner Program

Technology Partners were

companies with Internet Commerce applications, or Order
Management, Customer Management, and Financial Management solutions that complemented
or could be integrated into OT's services. OT provided partners with easy access to the OT
services allowing part
ners to offer more services to their clients and pre
-
configured 'plug
-
ins' for
popular E
-
commerce systems. They included Art Technology Group, InterShop and Microsoft.

The Partner
-
Sales Meeting

As an order
-
processing network, OT was heavily dependent on fr
ont
-
end interactive
agencies, web developers and system integrators to design OT services into e
-
commerce sites.
As the formal Partner Program entered its second year, Kay Paciorek the Director of Partner
Programs had built an impressive number of relation
ships with industry leading e
-
commerce
service providers such as Microsoft, Art Technology Group, Intershop, Open Market, Signature,
and Digex. In 1999, OT estimated that 20
-
50% of revenue would be generated directly by
partner referrals.

But the competit
ive landscape sometimes resembled the Wild West, with so
-
called
partners cutting OT out of the e
-
commerce architecture entirely once they were referred to the
prospective client. The demanding requirements for a solid partner relationship seemed to consist

of:

-

Clearly set expectations or contractual obligations

-

Strong personal contact between the salesforces of each organization

-

Potential for sharing revenue of sales through commission

-

An existing shared customer.


Over the past several months the OT salesf
orce had been frustrated by partners that
claimed expertise in the portion of the “back
-
end” to which OT laid claim.

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

9

Since OT had a small sales force (10
-
15 people), the sales force at OT was counting on
the business development group to strengthen the de
pth and quality of their partner relationships
in order to gain better, more frequent referrals, and gain more customers through joint selling
engagements.

Many of OT’s current partners offered incentives for referrals, sometimes a percentage of
the busin
ess generated for a specific time period, or a flat fee. OT did not reciprocate these
“spifs.” As an example, ICC an e
-
commerce EDI company that was in the process of partnering
with OT offered generous revenue sharing on account referrals:

Year 1


20%

Yea
r 2


20%

Year 3


15%

Year 4


10%

Year 5


5%


Most referral programs were closer to 10% of referred revenues for the first year and
declining percentage over 2
-
3 years (for examples of referral agreements, see Exhibit 6). Other
referral “spifs” awarded priz
es such as American Express gift certificates, weekend getaways,
golf clubs or Palm Pilots. This had the added advantage of lower administrative issues, and direct
awards to the field, since no corporate check had to be cut.

As Kay Paciorek prepared for a
n upcoming meeting with the salesforce to improve the
relationship with partner salesforces, she contemplated creating a referral arrangement for
revenue sharing. How could a program be designed to increase revenues without taxing the
limited resources of
the growing company? Where would the “spifs” and referral fees be
budgeted and administered from, Sales or Business Development? How should the program be
designed to ensure that they received the right type of referrals? Which partners should OT focus
on?

What were some other options for motivating partners and administering a more formal
program? Finally, should there be some formal guidelines between OT and its partners while
making joint presentations to customers?

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

10

Exhibit 1

The OrderTrust Network



OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

11

Exhibit 2

Example of an OrderTrust Customer


SkyMall


SkyMall’s in
-
flight catalog was stuffed into the seat pockets of nearly 20 U.S. airlines and
interactive shopping service in more than 250,000 hotel rooms. In 1997 SkyMalls’s revenues
exceeded $60 mill
ion. The 180 page SkyMall catalog was a compilation of 70 different
catalogs of the latest gadgets that included upscale vendors such as The Sharper Image and
Brookstone.


In late 1997 SkyMall installed an electronic messaging network that provided a bett
er link to
its catalog partners


in effect, its suppliers


and cut its order delivery from four days to two
days. The network provided by OrderTrust replaced an arrangement that relied heavily on
paper order, overnight mail and redundant data entry.


Un
der the old scenario, SkyMall’s standard delivery was 7
-
10 days and express delivery was 3
days. Only one of SkyMall’s suppliers had been receiving orders electronically from one its
call center via a dedicated network connection. Seven other catalogers us
ed a dial
-
up
connection to gain access to a SkyMall bulletin board and retrieved batched orders for the day.
The remainder of the catalogers received orders in an overnight Fedex envelope or by fax for
express orders.


In 1998 customers could shop at the
SkyMall website, complete an
HTML

order form or they
could talk to an operator at a 1
-
800 number. SkyMall used an order
-
entry system based on
Microsoft Site Server 3.0 that served as the back end for both the web and call center orders.
All these orders we
re transmitted to the OrderTrust network. OrderTrust then received credit
card authorizations for each order through the appropriate credit card processor. The orders
were then routed to the respective vendors, reformatting the data as necessary. For fully

automated vendors OrderTrust piped the orders in through customized interfaces to the
vendors’ own order
-
entry systems. For low
-
tech vendors, OT sent a fax or other preferred
method. Vendors responded to OrderTrust with order status messages in like fashi
on.
OrderTrust tracked the status of all SkyMall orders and transmitted status updates back to
SkyMall once per day.


Today, standard deliveries arrive within 3
-
4 days and overnight delivery is available.


Sources:

SkyMall’s “Supplier Network” Take Fligh
t, Logistics Section,
Retail Tech Magazine
, 1997

Taking Web
-
Based Retailing Skyward,
PC Week
, April 27, 1998

Net Prophet,
Infoworld
, July 27, 1998


OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

12

Exhibit 3

OrderTrust Transactions




Capture
Order
Rotate
Order
Initiate
Settlement
Send E-Mail
Notification
Request
Credit Card
Authorization
Check
Inventory
Manage Order Status
1
2
3
6
4
5



OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

13

Exhibit 4

Cost of Developing an e
-
commerce Site


Front End Intern
et Storefront Package


ICAT or Open Market

$10,000

Back End Internet Commerce Package


Clear Commerce, Open Market

$125,000

2 or 3 Multiprocessor Servers


SGI or Sun

$240,000

Cyber Security, Firewalls and Encryption


Cisco, Checkpoint

$35,000

Multiple

High
-
speed T
-
1 Lines

$15,000

RAID System for crash protection


Storage Dimensions Symbios Logic

$50,000

Customer Database


Sybase, Oracle

$80,000

Networking Equipment


Cisco Systems, 3Com

$50,000

ACD Telephone Hardware and Software


Lucent Technolog
ies, Rolm/Siemens

$150,000

Diesel Generator and UPS Devices

$25,000

Physical Security Measures

$50,000

Technology and Credit Experts

$350,000

Sales and Customer Service Representatives

$200,000


GRAND TOTAL

$1,380,000



Typically, a $30,000.00 support
contract is required to ensure smooth integration of the software
package with you and your customer's technical architectures.


Monthly service charges of about $2,000 per line are part of the sunk costs of having a T
-
1 line.



Source: International Data
Corp.


OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

14

Exhibit 5

Miscellaneous Facts about E
-
Commerce in 1998



Trends in E
-
Commerce: Shop.org / Boston Consulting Group 1998 Study


Online retail and marketing expenses were $36 per order on average compared with $2.5 per
order with traditional brick
-
an
d
-
mortar retailers.


1998 On
-
line Holiday sales


Year over year revenue tripled


# of orders grew 225%


Average order $55, up 6%


1998 Holiday Shoppers said:


36%
-

Save Time


15%
-

Save Money


11%
-

Avoid Crowds


10%
-

Better Selection


10%
-

Fun Shoppin
g Experience


Online Shopping Revenues


Business to Consumer


1997
-

$2.6 billion


1998
-

$13 billion


1999
-

$35 billion


Growth in online audience


1997
-

49 million US users


2002
-

116 million US users


Growth in the number of online buyers


1997
-

1
0 million in the US


2002
-

61 million in the US


Customer service was still not king on the web. While 86% of e
-
commerce sites offered
an 800 number, only 34% had a fax number, and fewer than half listed ordering hours. (Source:
e
-
tailing group)

A study
of 100 representative online retailers, only 16% offered online shipping status
and only 14% provided real
-
time order confirmation numbers. (Source: e
-
tailing group)

The majority of online merchants had no standard policy or process for handling
exchanges

and returns. The National Association of Consumer Agency Administrators
(NACAA) reported in a November 1998 survey that top internet e
-
commerce complaints
included failure to receive goods or services ordered and problems obtaining refunds on returned
goo
ds.

OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

15

Exhibit 6

Examples of Typical Referral Contracts

Example 1

Commissions


1.Commission.
During the term of this Agreement and provided Representative is not in default of any obligations
hereunder. Representative shall receive a commission as set forth

in the commission percentage table below on
Billed Monthly Revenue or Collected Monthly Revenue for new contracts solicited by the Representative, excluding
existing Company account conversions, on the Services sold by Representative in accordance with Co
mpany’s then
existing Tariffs and Agency Price List. For purposes of this agreement, “Billed Monthly Revenue” shall mean the
interexchange toll or usage charges billed by Company related to the use of Services by Subscribers. “Collected
Monthly Revenue” sh
all mean the amount of Billed Monthly Revenue actually collected by Company. Any
promotional or other credits granted shall be deducted from the monthly usage charges prior to the calculation of
commissions hereunder. The amount of commissions hereunder wi
ll be derived by applying the commission
percentage set forth below to the eligible charges incurred under the Tariff for Services used by Subscribers
accepted by Company after all discounts, credits, and promotions. Company will use commercially reasonabl
e
efforts to make commission payments to Representative approximately forty
-
five (45) days from the end of the
month to which said percentage is applied.


2. Commission Percentages.

Subject to Section 1 above, Company will pay to Representative a commissi
on in
accordance with the following table. The commission percentage is valid only on standard tarrifed Services as
normally offered to customers. Commission on non
-
standard services or those provided under special pricing and/or
promotion arrangement will

be determined on a case
-
by
-
case basis.


Commission Percentage Table

0

to

$ 99,999

10%

$100,000

to

$199,999

11%

$200,000

to

$299,999

12%

$300,000

to

$399,999

13%

$400,000

to

$499,999

14%

$500,000

to

$599,999

15%

Example 2

Your Compensation


In retur
n for your participation in the Program, SuperSite will pay you approximately thirty (30) days after the end
of each calendar quarter, a commission equal to 10% of the aggregate amount of all fees, excluding any taxes,
actually collected by SuperSite durin
g that quarter in connection with providing standard SuperSite products and
services (those on our Price List) to each customer referred to us by you during the first (12) month period that
SuperSite provides services to each such referred customer. If we
determine that the customer referral is the result of
your direct efforts of another party, we reserve the right to allocate a portion of the commission to such other party
in proportion that we determine to be equitable. Our decision on the allocation of
commissions will be final and
binding on all parties involved. Additionally, we will offer you a discount of 25% off the standard list price of the
first server hosted by SuperSite for your own use. Our payment obligations are exclusive of, and you shall b
e
responsible for, all sales, use, value
-
added, privilege, excise or similar duties or taxes levied upon you.


OrderTrust Inc
.: One
-
Stop Order Management Services for E
-
Commerce

133
-
C99

16

Glossary


ASP
: Application Service Providers. They host, support and manage applications such as email, e.g., NaviSite.

Commerce Server / Platfo
rm
: Any product used to enable commerce transactions. Examples are Microsoft
SiteServer, Commerce Edition, Open Market’s Transact4, iCAT’s Electronic Commerce Suite.

Distributors
: Any firm that compiles products from multiple manufacturers then may wareho
use and ship them.

Dot.com
:

An internet “pure
-
play” with no existing brick & mortar infrastructure.

EDI
: Electronic Data Interchange

Endpoint
: An entity in the business network. Could be a distributor, supplier, manufacturer, VAR, warehouse
and/or a fulfi
llment house.

FTC
: Federal Trade Commission

FTP
: File Transfer Protocol

Fulfillment house
: A fulfillment house packages and ships products to customers on behalf of a merchant

HTML
: Hyper Text Markup Language. The programming language used to create inter
net web pages.

ISP
: Internet Service Provider. The firm that allows a computer to be hooked up to the internet.

Integration
: Creating a programmatic interface between a commerce site and the OT network.

Legacy Systems
: Computer software programs that wer
e used to control a firm’s product ordering, routing and
scheduling. The term Legacy comes from the fact that these are outdated systems. Examples: MRP, MRP
-
II

Merchant
: The organization that owns the right
-
to
-
sell merchandise and desire to market and sell

it.

Merchant aggregators
: A firm that merchandises products and/or services not from manufacturers or distributors,
but from predefined catalogs. Example: SkyMall catalog.

Order
: A single electronic description of merchandise and its attendant method of
payment, including shipping
instructions, as generated by a consumer.

Payment processor
: A firm that processes payment transactions for the merchant. The payment processor is used
for performing authorizations and/or deposits.

Spifs
: Spifs are commissions
, kickbacks, or even tokens given to sales personnel as incentives for generating sales.

SSL
: Secure Socket Layer. The widely accepted security protocol used on the internet.

Stickiness
: “Stickiness” refers to a Web site’s ability to attract engaged, repe
at visitors who spend more and more of
their time on a given site instead of briefly alighting and then flitting off to some other corner of cyberspace.
Source: Wall Street Journal, Dec. 7, 1998.

Supplier
: A firm that is the source of a product or service

Systems integrator
: Firm that provides installation, administration, monitoring, maintenance, and consulting
services and network integration via hardware and software expertise (not necessarily their own).

TCP/IP
: Transmission Control Protocol / Internet
Protocol

Telemarketers
: Firms that receive orders from customers via a 1
-
800 telephone number.

Transaction
: The data that payment receives, validates, and persists. Transactions represent authorization attempts,
settlements, and refunds.

VAR
: Value Added
Reseller. Firms that sell another firm’s product by adding value to the product either via service
support or maintenance arrangements or as an integral part of their whole product.